Canon 2011 Annual Report Download - page 81

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Strategy Business Units Management System FINANCIAL SECTION
79
!37 !101
FINANCIAL SECTION
The Company and its domestic subsidiaries are subject to
a number of income taxes, which, in the aggregate, repre-
sent a statutory income tax rate of approximately 40% for
the years ended December 31, 2011, 2010 and 2009.
Amendments to the Japanese tax regulations were
enacted into law on November 30, 2011. As a result of these
amendments, the statutory income tax rate will be reduced
from approximately 40% to 38% effective from the year
beginning January 1, 2013, and to approximately 35% effec-
tive from the year beginning January 1, 2016 thereafter.
Consequently, the statutory income tax rate utilized for
deferred tax assets and liabilities expected to be settled or
realized in the period from January 1, 2013 to December 31,
2015 is approximately 38% and for periods subsequent to
December 31, 2015 the rate is approximately 35%. The
adjustments of deferred tax assets and liabilities for this
change in the tax rate amounted to ¥6,599 million ($84,603
thousand) and have been reflected in income taxes in the
consolidated statement of income for the year ended
December 31, 2011.
A reconciliation of the Japanese statutory income tax rate and the effective income tax rate as a percentage of income
before income taxes is as follows:
Japanese statutory income tax rate
Increase (reduction) in income taxes resulting from:
Expenses not deductible for tax purposes
Income of foreign subsidiaries taxed at lower than
Japanese statutory tax rate
Tax credit for research and development expenses
Change in valuation allowance
Effect of enacted changes in tax laws and rates on Japanese tax
Other
Effective income tax rate
2011 2010 2009
40.0%
0.6
(4.3)
(3.9)
(0.5)
1.8
(1.5)
32.2%
40.0%
0.8
(3.5)
(5.1)
2.8
—
0.7
35.7%
40.0%
0.9
(5.4)
(2.8)
5.4
—
0.2
38.3%
Years ended December 31
Net deferred income tax assets and liabilities are included in the accompanying consolidated balance sheets under the
following captions:
Prepaid expenses and other current assets
Other assets
Other current liabilities
Other noncurrent liabilities
2011 2010
Millions of yen
Thousands of
U.S. dollars
2011
¥
61,961
130,582
(1,735)
(43,542)
¥
147,266
¥69,197
136,727
(2,149)
(47,827)
¥155,948
$ 794,372
1,674,128
(22,244)
(558,231)
$1,888,025
December 31